November 27, 2004

OP-ED COLUMNIST

Good News About Poverty

By DAVID BROOKS

hate to be the bearer of good news, because only pessimists are regarded as
intellectually serious, but we're in the 11th month of the most prosperous
year in human history. Last week, the World Bank released a report showing
that global growth "accelerated sharply" this year to a rate of about 4
percent.

Best of all, the poorer nations are leading the way. Some rich countries,
like the U.S. and Japan, are doing well, but the developing world is leading
this economic surge. Developing countries are seeing their economies expand
by 6.1 percent this year - an unprecedented rate - and, even if you take
China, India and Russia out of the equation, developing world growth is
still around 5 percent. As even the cautious folks at the World Bank note,
all developing regions are growing faster this decade than they did in the
1980's and 90's.

This is having a wonderful effect on world poverty, because when regions
grow, that growth is shared up and down the income ladder. In its report,
the World Bank notes that economic growth is producing a "spectacular"
decline in poverty in East and South Asia. In 1990, there were roughly 472
million people in the East Asia and Pacific region living on less than $1 a
day. By 2001, there were 271 million living in extreme poverty, and by 2015,
at current projections, there will only be 19 million people living under
those conditions.

Less dramatic declines in extreme poverty have been noted around the
developing world, with the vital exception of sub-Saharan Africa. It now
seems quite possible that we will meet the United Nations' Millennium
Development Goals, which were set a few years ago: the number of people
living in extreme poverty will be cut in half by the year 2015. As Martin
Wolf of The Financial Times wrote in his recent book, "Why Globalization
Works": "Never before have so many people - or so large a proportion of the
world's population - enjoyed such large rises in their standard of living."

As other research confirms, these rapid improvements at the bottom of the
income ladder are contributing to and correlating with declines in
illiteracy, child labor rates and fertility rates. The growth in the world's
poorer regions also supports the argument that we are seeing a drop in
global inequality.

Economists have been arguing furiously about whether inequality is
increasing or decreasing. But it now seems likely that while inequality has
grown within particular nations, it is shrinking among individuals
worldwide. The Catalan economist Xavier Sala-i-Martin looked at eight
measures of global inequality and found they told the same story: after
remaining constant during the 70's, inequality among individuals has since
declined.

What explains all this good news? The short answer is this thing we call
globalization. Over the past decades, many nations have undertaken
structural reforms to lower trade barriers, shore up property rights and
free economic activity. International trade is surging. The poor nations
that opened themselves up to trade, investment and those evil multinational
corporations saw the sharpest poverty declines. Write this on your forehead:
Free trade reduces world suffering.

Of course, all the news is not good. Plagued by bad governments and AIDS,
sub-Saharan Africa has not joined in the benefits of globalization. Big
budget deficits in the U.S. and elsewhere threaten stable growth. High oil
prices are a problem. Trade produces losers as well as winners, especially
among less-skilled workers in the developed world.

But especially around Thanksgiving, it's worth appreciating some of the
things that have gone right, and not just sweeping reports like the one from
the World Bank under the rug.

It's worth reminding ourselves that the key task ahead is spreading the
benefits of globalization to Africa and the Middle East. It's worth noting
this perhaps not too surprising phenomenon: As free trade improves the lives
of people in poor countries, it is viewed with suspicion by more people in
rich countries.

Just once, I'd like to see someone like Bono or Bruce Springsteen stand
up at a concert and speak the truth to his fan base: that the world is
complicated and there are no free lunches. But if you really want to reduce
world poverty, you should be cheering on those guys in pinstripe suits at
the free-trade negotiations and those investors jetting around the world.
Thanks, in part, to them, we are making progress against poverty. Thanks, in
part, to them, more people around the world have something to be thankful
for.